Thinking about purchasing a second home in Boise? Making the decision to buy a second home is a major undertaking with considerable benefits that can also come. Here’s what you should know about buying a second home in Boise to put you in the right frame of mind and brace you for the important details.
What’s the Purpose?
You want to take a step back to figure out what you want to get out of purchasing a second home before you begin browsing through the for sale listings.
Maybe you’re looking for a summer getaway/holiday home, or maybe you want to start by renting out the home in a desirable neighborhood to bring in some extra income. It allows you to decide what you are looking for from the property and narrow down your search by taking the time to consider the role the property will play in your life.
If the plan is to rent out the property, by establishing the kind of tenant you are looking to attract, you will want to tailor your house search even more. Laying all of this groundwork ahead of time makes this much easier for the rest of the process.
Know Your Lender Limitations
You are likely to rely on a mortgage lender’s funding, and the vast majority of lenders have a minimum number of days you need to stay in this second property to qualify for financing.
The details of this will be clearly indicated in any agreements you sign, but before signing on the dotted line, you want to find out these restrictions. The reason lenders need to spend a certain amount of time at your second home is to ensure that you are aware of something that does not happen on the house. This helps us minimize the risk that a big structural problem will go unnoticed for too long, such as burst pipes or a roof in poor repair.
Also, bear in mind that second homes, such as USDA and VA loans, are ineligible for government loan programs. These services require that your primary residence be the mortgaged house.
Finally, when saving for a second home, lenders would have stricter requirements for revenue, credit score, and debt-to-income ratio. To get it finalized with your preferred mortgage lender, prepare to go through some hoops.
We suggest you round up all costs slightly to approach things from a practical worst-case financial scenario while making a budget that involves paying for a second home.
Try to get as many information from your lender about your expected monthly payments, interest rates, and minimum down payment. It is very likely that your interest rate and down payment on your second home will be comparatively higher, and before you get too far into the process, you want to be ready for that.
Also, get an estimate on the new property for any required insurance and round it up a bit as well. A large part of making your second home purchase a success is due to budgeting correctly and living within reasonable constraints.
Consult a Professional
A final piece of helpful advice is to consult a local accountant or attorney.
The goal here is to get the ins and outs of any local, state, and federal stipulations regarding your second home.
Secondly, this also offers you the ideal opportunity to gain details on possible tax advantages that you might benefit from a second home. The tax benefits would be limited, just as we discussed previously, by the intent of the property and the amount of time you occupy the house during the year.
Putting all these components together will help give you a much clearer picture of going forward with your financial situation.
Help When Buying a Second Home in Boise
If you’re looking to buy a second home in Boise and don’t know where to start, contact us at (208)314-1350 today!